European Retail Mergers Are Slowed by Economy, EuroCommerce Says

Jan. 28 (Bloomberg) -- Merger activity involving European
retailers will remain subdued as the financial crisis continues
to weigh on consumers, according to EuroCommerce, a group
representing the region’s retailers.

“What you’ve been seeing is that merger activity has been
slow in last three or four years in all sectors,” Lucy Neville-Rolfe, president of EuroCommerce, said in an interview in Lisbon
today. “It will come back but I’m not sure confidence is yet
quite strong enough for people to feel that they are going to
make those financial gains that tend to be a feature of that
kind of activity.”

To counter a weak economy in Europe and a drop in consumer
confidence, companies such as Carrefour SA, France’s biggest
retailer, are expected to continue expansion in emerging
markets, including South America, said Neville-Rolfe, the former
head of corporate governance at Tesco Plc who took up her post
at EuroCommerce last year.

There are opportunities overseas, said Neville-Rolfe, whose
association represents six million companies that employ about
33 million workers in the EU retail sector. “We’ve been doing a
good job investing in Latin America, for example, in the case of
Carrefour.”

While consumer confidence is still “bumping along the
bottom,” decisions by EU leaders late last year have helped
stabilize things and this year may be a “turning point” for
the industry, said Neville-Rolfe.

“It would be wrong to think of an early recovery, but you
are beginning to see markets looking a bit more optimistic and
that’s usually a good sign,” she said.

Some retailers in the U.K. have gone out of business while
others have cut costs and adapted to the economic slowdown by
promoting and selling their products online, she said.

“There are some areas of continued growth and a very
obvious area is e-commerce,” said Neville-Rolfe. “That is the
sort of direction that you will see things going.”